ACCOUNTING

6.   Janson Corporation Co.’s trial balance included the following account balances at December 31, 2011:

Accounts payable $25,000
Bond payable, due 2020 22,000
Salaries payable 16,000
Note payable, due 2012 20,000
Note payable, due 2016 40,000

What amount should be included in the current liability section of Janson’s December 31, 2011, balance sheet?

 

[removed]A. $41,000
[removed]B. $101,000
[removed]C. $61,000
[removed]D. $63,000

 

7.   On June 1, Royal Corp. began operating a service company with an initial cash investment by shareholders of $2,000,000. The company provided $6,400,000 of services in June and received full payment in July. Royal also incurred expenses of $3,000,000 in June that were paid in August. During June, Royal paid its shareholders cash dividends of $1,000,000. What was the company’s income before income taxes for the two months ended July 31 under the following methods of accounting?

  Cash Basis Accrual Basis
a. $3,400,000 $3,400,000
b. $5,400,000 $2,400,000
c. $6,400,000 $3,400,000
d. $6,400,000 $2,400,000

 

[removed]A. Option c
[removed]B. Option b
[removed]C. Option a
[removed]D. Option d

 

                8.   Temporary accounts would not include
 

[removed]A. cost of goods sold.
[removed]B. depreciation expense.
[removed]C. salaries payable.
[removed]D. supplies expense.

 

9.   On November 1, 2011, Tim’s Toys borrows $30,000,000 at 9% to finance the holiday sales season. The note is for a six-month term and both principal and interest are payable at maturity. What should be the balance of interest payable for the loan as of December 31, 2011?
 

[removed]A. $1,350,000.
[removed]B. $112,500.
[removed]C. $450,000.
[removed]D. $225,000.

 

10.   A cause-and-effect relationship is implicit in the
 

[removed]A. historical cost principle.
[removed]B. going concern assumption.
[removed]C. matching principle.
[removed]D. realization principle.

 

11.   The most likely important flaw leading to the demise of the APB was the perceived lack of
 

[removed]A. importance.
[removed]B. competence.
[removed]C. independence.
[removed]D. confidence.

 

12.   An example of a contra account is
 

[removed]A. sales revenue.
[removed]B. accounts receivable.
[removed]C. depreciation expense.
[removed]D. accumulated depreciation.

 

 

 

 

 

13.   Janson Corporation Co.’s trial balance included the following account balances at December 31, 2011:

Accounts receivable $12,000
Inventories 40,000
Patent 12,000
Investments 30,000
Prepaid insurance 6,000
Note receivable, due 2014 50,000

Investments consist of treasury bills that were purchased in November and mature in January. Prepaid insurance is for the next two years. What amount should be included in the current asset section of Janson’s December 31, 2011, balance sheet?

 

[removed]A. $135,000
[removed]B. $55,000
[removed]C. $88.000
[removed]D. $85,000

 

14.   In its first year of operations Best Corp. had income before tax of $500,000. Best made income tax payments totaling $210,000 during the year and has an income tax rate of 40%. What was Best’s net income for the year?
 

[removed]A. $290,000
[removed]B. $306,000
[removed]C. $294,000
[removed]D. $300,000

 

15.   Based on recent financial statement data for Harmony Health Foods, Inc. (HHF), shown below, HHF’s debt-to-equity ratio is (rounded)

https://my.pennfoster.com/exams/images/061500NR_Q36-38.gif

 

[removed]A. 0.53.
[removed]B. 0.75.
[removed]C. 1.13.

 

16.   Pat’s Custom Tuxedo Shop maintains its records on the cash basis. During this past year Pat’s collected $42,000 in tailoring fees, and paid $14,000 in expenses. Depreciation expense totaled $2,000. Accounts receivable increased $1,500, supplies increased $4,000, and accrued liabilities increased $2,500. Pat’s accrual basis net income would be
 

[removed]A. $29,000.
[removed]B. $23,000.
[removed]C. $18,000.
[removed]D. $34,000.

 

17.   SFAC No.5 focuses on
 

[removed]A. objectives of financial reporting.
[removed]B. qualitative characteristics of accounting information.
[removed]C. elements of financial statements.
[removed]D. recognition and measurement concepts in accounting.

 

18.   Which of the following was the first private sector entity that set accounting standards in the United States?
 

[removed]A. AICPA
[removed]B. Committee on Accounting Procedure
[removed]C. Accounting Principles Board
[removed]D. Financial Accounting Standards Board

 

19.   Dave’s Duds reported cost of goods sold of $2,000,000 this year. The inventory account increased by $200,000 during the year to an ending balance of $400,000. What was the cost of merchandise that Dave purchased during the year?
 

[removed]A. $1,800,000
[removed]B. $1,600,000
[removed]C. $2,400,000
[removed]D. $2,200,000

 

 

 

20.   Ace Bonding Company purchased merchandise inventory on account. The inventory costs $2,000 and is expected to sell for $3,000. Indicate how Ace should record the purchase by selecting one of the options listed below.

 

a. Inventory 2,000
 Accounts payable 2,000
b. Cost of goods sold 2,000
Deferred revenue 1,000
 Sales in advance 3,000
c. Cost of goods sold 2,000
 Inventory payable 2,000
d. Cost of goods sold 2,000
Profit 1,000
 Sales payable 3,000
 

[removed]A. Option b
[removed]B. Option a
[removed]C. Option d
[removed]D. Option c

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21.   Listed below are account balances (in $millions) taken from the records of Symphony Stores. All of these are permanent accounts, except the last two that have yet to be closed. The installment receivables are current. Symphony uses a perpetual inventory system.

https://my.pennfoster.com/exams/images/061500NR_Q16-19.gif

What would Symphony report as total assets?

 

[removed]A. $2,338
[removed]B. $2,318
[removed]C. $2,303
[removed]D. $2,323

 

22.   The full disclosure principle requires a balance between
 

[removed]A. relevance and cost effectiveness.
[removed]B. timeliness and predictive value.
[removed]C. comparability and consistency.
[removed]D. reliability and neutrality.

 

23.   Based on recent financial statement data for Harmony Health Foods, Inc. (HHF), shown below, HHF’s times interest earned ratio is (rounded):

https://my.pennfoster.com/exams/images/061500NR_Q36-38.gif

 

[removed]A. 3.47
[removed]B. 2.47.
[removed]C. 1.73.

 

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